The major issue raised by some parties and the Assigned Commissioners in the DAWG proceeding since the September filing of the DAWG Report concerns unbundling of the UDCs' distribution functions. Unbundling would be a grave error.

Fundamental to the operation of any business is the ability of the business to measure the commodity or service sold to its customers and to bill for and collect the charges for those services. To require otherwise would threaten the commercial viability of the UDC. This basic principle is supported by Commission decisions and important provisions of the restructuring legislation:

Of course, Electric Service Providers are free to perform billing and metering functions for the services they provide.

The distribution unbundling proposals presented by various parties do not involve competition, but rather artificial "credits" to be established through a cumbersome regulatory process. Unbundling proponents hope to use these "credits" to cherry­pick lower cost customers, thereby undermining the rate freeze.

Further, unbundling distribution services would have at best minimal benefits for consumers and more likely substantial detriments. For example, the average cost of meter reading is estimated at less than $1 per residential customer per month (compared to an average monthly bill of $65). Moreover, unbundling metering would destroy the economies of scale that would allow universal deployment of real­time metering at reasonable cost.

In any event, the Commission should not jeopardize the gains from competition in generation by attempting to unbundle distribution services by January 1, 1998. In the U.K., the attempt in 1994 to unbundle metering simultaneously with the expansion of competition in electric supply produced "chaos" in the market, with 73% of customers polled in one study reporting problems with their bills.

For much the same reasons, Edison urges the Commission to adopt the phase-in plan proposed by it and PG&E in their opening comments. The same magnitude of problems experienced in the UK may be experienced here if there is no testing period of the newly created and complicated technical and market structures, followed by as rapid a phase-in as the ISO and CPUC deem feasible. The determination of the appropriate phase­in must be made during the implementation, to account for difficulties and successes as they occur.

Finally, further restrictions on utility affiliates, including restrictions on their territories, are unnecessary. The present CPUC rules work very well and increasing restrictions would work only to benefit the affiliates' marketing competitors by lessening competition, to the detriment of consumers.